The U.S. government is moving to seize 127,271 BTC, valued at roughly $14 billion, tied to a sprawling online investment scam run by Chinese émigré Chen Zhi, 38, and his Cambodia-based Prince Group Transnational Criminal Organization.
The action, announced Monday by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN), comes as part of a sweeping crackdown on transnational cybercriminal networks and scams targeting U.S. and allied citizens.
Chen Zhi, also known as “Vincent Chen,” had built a multi-billion-dollar empire in Cambodia through online scams that lure victims into fraudulent investment schemes known as “pig butchering” scams.
Victims are cultivated over months and persuaded to deposit funds into fake investment platforms.
Pig-butchering scam details
According to the indictment, filed in the Eastern District of New York, Chen and his co-conspirators lured victims worldwide into fake crypto platforms, using social media and messaging apps to build trust before stealing their funds.
The network allegedly operated out of heavily guarded “scam compounds” in Cambodia, where workers were forced and coerced into running the schemes.
Prosecutors claim the operation laundered billions in illicit proceeds through shell companies, real estate, gambling ventures, sextortion, and large-scale Bitcoin mining facilities in Asia and the United States.
The U.S. government formally alleged that Chen’s network moved and concealed at least 127,000 bitcoin, valued at billions of dollars, across numerous digital wallets.
Some speculate that the 127,271 BTC were reportedly stolen in 2020 and tied to the LuBian mining operation. The BTC have sat idle ever since, with the U.S. seeking forfeiture from the defendant.
But the U.S. Justice Department confirmed the funds are reportedly in U.S. possession and didn’t explain how they were recovered or transferred. If this is true, the US government would now hold 325,283 BTC, worth over $37 billion.
In March, President Trump signed an Executive Order creating a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile to centralize government-held crypto. The Reserve, including the $14 billion in seized bitcoin at the time, would be held as a store of value and not sold.
Theoretically, if the 127,271 bitcoins from this scam were added to the Reserve, they would remain unsold.
Large-scale corruption and abuse
The indictment also describes a web of corruption and violence underpinning the enterprise, including bribes to foreign officials, threats, and physical abuse to maintain control over workers and protect the organization.
Chen faces charges of conspiracy to commit wire fraud and conspiracy to launder money, both carrying potential decades-long prison sentences.
Prosecutors are seeking forfeiture of the bitcoin and crypto holdings and other assets tied to the alleged crimes.
The United Kingdom’s Foreign, Commonwealth, and Development Office (FCDO) coordinated parallel sanctions on Chen Zhi, Prince Holding Group, and key associates.
Additional laundering sanctions and details
In addition to the Bitcoin seizure, Treasury finalized a rule severing Huione Group, a Cambodia-based financial services conglomerate, from the U.S. banking system, according to the U.S. Treasury press release.
The company reportedly laundered billions in virtual currency stolen by DPRK-linked hackers and Southeast Asia-based scam networks, including at least $300 million in other cybercrime proceeds.
OFAC’s sanctions target 146 entities and individuals tied to Prince Group TCO, including shell companies, real estate firms, banks, and operators of luxury resorts in Cambodia and Palau.
The sanctions also extend to facilitators like Palau-based Rose Wang, who helped Chen establish commercial operations abroad, including a 99-year lease for a luxury resort on Ngerbelas Island.
Monday’s coordinated U.S.–U.K. action follows earlier Treasury and FinCEN efforts targeting cybercriminals in Southeast Asia, including sanctions against Burmese and Cambodian operators and DPRK-linked money laundering networks.
Source: https://bitcoinmagazine.com/news/u-s-seizes-14-billion-in-bitcoin-from-scam
